* World stocks index near record high; Dow above 20,000
* Dollar rebounds from 7-week low; gold down
* U.S. Treasury debt yields up before 7-year note sale
* Oil up on stock market, but U.S. supply caps gains (Updates to U.S. market open, adds details, changes dateline, previous LONDON)
By Saqib Iqbal Ahmed
NEW YORK, Jan 26 (Reuters) - A key index of global equity markets held near a record high on Thursday, supported by mergers and acquisitions, strong corporate earnings and investor optimism spurred by U.S. President Donald Trump's plans for new public spending.
The dollar rebounded from a seven-week low as investor demand improved with higher global bond yields and stable stock markets. The return of risk appetite in the financial market boosted oil prices. O/R
MSCI's world index .MIWD00000PUS , which tracks shares in 46 countries, was little changed and just 2 percent off its record high hit in April 2015. The index found support from rallying stocks in Asia and Europe.
On Wall Street, the Dow Jones Industrial Average held well above the 20,000 level after breaching the milestone on Wednesday, buoyed by optimism over U.S. President Donald Trump's pro-growth initiatives and solid earnings. S&P 500 and the Nasdaq Composite hit record levels immediately after the open, before easing off their highs to trade little changed on the day.
"Today is about earnings and part of the Dow reaching the 20,000 milestone is because of strong earnings," said Peter Cardillo, chief market economist at First Standard Financial in New York.
Of the 104 S&P 500 companies that had reported results through Wednesday morning, nearly 70 percent beat expectations, according to Thomson Reuters I/B/E/S.
Tech giants Intel INTC.O , Alphabet GOOGL.O , Microsoft MSFT.O and coffee chain Starbucks SBUX.O are scheduled to report results after market close.
The Dow Jones Industrial Average .DJI rose 46.78 points, or 0.23 percent, to 20,115.29, the S&P 500 .SPX gained 0.09 points, or 0.00 percent, to 2,298.46 and the Nasdaq Composite .IXIC added 1.42 points, or 0.03 percent, to 5,657.76.
European shares climbed to a one-year high supported by merger and acquisition-related optimism, with Johnson & Johnson (NYSE:JNJ)'s JNJ.N $30 billion deal to buy Actelion ATLN.S lifting shares in the Swiss biotech firm. pan-European STOXX 600 index .STOXX was up 0.17.
The dollar gained against a basket of major currencies as the greenback played catch-up with the recent rally in stocks. impression ... is that the Trump reflation trade may be getting back on track," said Shaun Osborne, chief FX strategist, at Scotiabank in Toronto.
The dollar index .DXY , which measures the greenback against a basket of six other major currencies, was up 0.67 percent to 100.7.
The firmer dollar pushed gold to a two-week low but expectations that the greenback's climb may be running out of steam helped limit losses. gold XAU= was down 1.16 percent to $1,186.27 an ounce. of a $28-billion auction of seven-year notes, U.S. Treasury debt yields turned higher with European yields and 10-year yields rose to a 4-week high. 10-year notes US10YT=RR were down 6/32 in price to yield 2.542 percent, up from 2.523 percent late on Wednesday.
The recent strength in stock markets boosted oil prices although gains were capped by plentiful supplies and bulging inventories in spite of efforts by producers to cut output. crude LCOc1 was up 2.4 percent at $56.4 a barrel, while U.S. crude CLc1 was up 2.2 percent at $53.91.
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http://reut.rs/1WAiOSC Global currencies vs. dollar
http://tmsnrt.rs/2egbfVh Global bonds dashboard
http://tmsnrt.rs/2fPTds0 Emerging markets in 2017
http://tmsnrt.rs/2ihRugV
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